Closser Corporation produces and sells two products. In the most recent month, Product M50S had sales of $39,000 and variable expenses of $12,870. Product H50G had sales of $12,000 and variable expenses of $4,980. The fixed expenses of the entire company were $33,050. The break-even point for the entire company is closest to:
A)$50,846
B)$50,900
C)$17,950
D)$33,050

Question

Quizplus · Accepted Answer

The break-even point is calculated by dividing the total fixed expenses by the contribution margin ratio. The contribution margin for both products is $33,150 ($39,000 - $12,870 + $12,000 - $4,980). The contribution margin ratio is $33,150 / $51,000 (total sales) = 0.65. The break-even point is $33,050 / 0.65 = $50,846.

Closser Corporation Produces and Sells Two Products